What Americans Don’t Understand About China’s Rise in Africa

Most Chinese people do not fully understand the extent to which Americans disregard events beyond their own borders.  It’s completely understandable that Chinese observers get confused on this front because from their vantage point the United States is usa_china_oila far more open and globalized country than China is today.  So how can it be that major geopolitical shifts go completely unseen by the American people?  Well, they do.  And none more significant than what is currently underway across the African continent where the United States is on the verge of being displaced by China as the continent’s largest investor, according to several reliable estimates.   “OK, so what?” the skeptic might say.  Investment patterns change with time and sometimes the United States will be on top and sometimes it won’t.  Fair point.  However, I invite you to consider the consequences of one very important development in Africa: oil.

  • Across Africa, from Algeria in the North to Angola in the South, China’s state-owned oil majors are investing tens of billions of dollars in exploration and extraction.
  • In Equatorial Guinea, one of Africa’s smallest countries yet one of the continent’s largest oil states, Chinese oil companies are displacing American majors as the country’s preferred foreign oil partners.

“Interesting, but not earth shattering,” you might counter.  What’s the catch?

  • Unlike American and international oil companies, according to journalist Richard Behar, Chinese oil companies are not extracting oil to put it on the international market.  Instead, the Chinese are locking up the oil just for themselves, taking it off the market entirely.  This has two important consequences for Americans to consider:
    1. The United States is constantly seeking ways to minimize its dependence on both Middle Eastern and Venezuelan sources of crude.  With China locking up exclusive oil contracts in Africa, the challenge of finding new, non-confrontational sources of oil becomes much more difficult.
    2. China’s decision to move that oil directly into own system and not into the international market has the potential to reduce overall supply and introduce new pricing pressures on already rising crude prices.

The United States has made remarkably little progress in overhauling its energy policy and reducing its dependence on imported oil.  Given the current domestic political realities where it will be difficult to impose radical changes on an economically beleaguered American electorate, it would be foolish to expect any radical adjustments in either energy policy or energy taxes.  So with China’s aggressive moves in Africa, Americans may soon wake up one day to learn that the days of enjoying cheap energy have finally come to an end.

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